1. Overview

Caribou Coffee (NASDAQ: CBOU), is the second largest, company-owned, gourmet coffeehouse operator in the U.S. It was founded in 1992 and headquartered in Minneapolis, Minnesota. In December 2008, caribou coffee had 511 retail locations, including 97 franchised. It has international locations through North Korea and the Middle East. One of its main investors are Arcapita which owns 60% of the companies share. Caribou Coffees main objective is to create an exceptional experience for its customers through , combining products of a high quality with friendly and warm customer services and coffee house atmosphere. Caribou menu offers 37 special drinks. the tried and true latte is caribous best selling drink. Caribou Coffee offers also a wide range of products that are sold to supermarkets, different merchants, offices coffees suppliers, hotels, airlines, entertainment and sports sites and other business customers. Additionally, Caribou certify third parties to use its brand on quality foods and merchandised stuff.

This paper will start with the company financial analysis, then would shift to the pestle analysis for the company and the specialty coffee industry it is operating in. Secondly doing  an internal analysis using porter five forces and porters generic strategies. Thirdly, highlighting the major opportunities, threats, weakness and strength of caribou. Finally drawing a conclusion that suggests somerecommendation for the company to staustain its competitive advantage.

2.Financial Analysis:

The following is a financial analysis of the companys status in 2008 compared to 2007.

Net Sales: has decreased in the retail coffee house from $256.8 million in 2007 to $253.9 million in 2008 due to the decrease in operating weeks of 1,004 coffeehouse in 2008 compared to 2007.

related tenancy costs and Cost of sales : Increased from $108.4 million in 2007 to $109.6 million in 2008 in the commercial and franchise segments. Compared to the company coffee house, Commercial and Franchise segments sales are higher in related tenancy costs rate and cost of sales . this was mainly as a result of selling to present groceries and selling to new businesses customers., also due to franchise fees, royalties and product sales from 46 new franchise coffee houses openings in the same year.

 Operating expenses: has decreased from $107.1 million in 2007 to $100.3 million in 2008, due to the decreasing numbers of company-functioned coffee houses operating during 2008 to 2007 and low employment operating cost

3.PESTEL Analysis:

 - Political:

 Fair Trade issues in the specialty coffee industry: “Fair Trade is a trade affiliation, based on transparency and dialogue.It aims at equity in international trade through sustainable development, offering better trading conditions and securing the rights of marginalized producers and workers” [FINE 2001 in Jeremy Weber 2007].In case of coffee trading to obtain a certificate as Fair Trade, There are
several criterion each coffee farmer must satisfy. These criteria include the implementation of sustainable, environmentally sensitive growing practices and more. In promoting to the public that its part of the fair trade partnership, Caribou is featuring it is new “fair trade-Rwanda”
coffee. This has been always a part of caribou
s marketing strategy.

-Economic:

 The international coffee agreement: The first international coffee agreement (IPA) pact was created by the U.N to sustain coffee prices among member countries. These prices were normally fluctuating due to variance in supplies and demands. In 2007 the IPA focused on supporting a steady coffee economy in developing businesses that relies mostly on coffee exporting. The policies and principles that the IPA supports includes green coffee schemes, education schemes and sustainable agricultural information and mechanical aid to farmers. Theres a huge weight of sustainable coffee economy to the world .Due to the fact that Most developing nations rely on coffee as a major export , coffee sales constitutes above half of the annual exporting gross. Therefore, producing coffee is considered one of the most important way of contribution to socio economic developments and eliminations of poverty. In addition,Coffee has an important economic forces on importing nations. The increasing rate of coffee consumption
since the 90
s, provided many job opportunities in various sectors from transportation to entrepreneurship.

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 -Social:

Coffee is flourishing in Asia where coffee shops became a place for friends to gather for social events than for coffee itself. Unlike many Western countries, Asians prefer light sweet coffee taste for instance thirty percent of Asians who buy ready-to-drink prefer cappuccino, mocha is preferred by quarter of coffee drinkers at coffee shops while 17 percent prefer Regular coffee .by tradition, Asian people preferred tea, but the existence of coffee shops in Asia like Starbucks created a booming coffee culture. Also, the booming coffee culture in Asia has been fueled in part by young urban professionals who ...

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